A Geometric Approach to Disequilibrium Exchange Rate Fluctuations: The Case of Switzerland

This article deals with the effects of exchange rate fluctuations in non-Walrasian macromodels. A demand driven model ('Keynesian Unemployment') and a supply model ('Classical Unemployment'), both estimated on Swiss data, are alternatively considered. In each case an exchange rate mification and possible accompanying policy measures are considered. The feasible consequences on employment and the balance of trade are investigated by means of a geometric comparative static technique. For each type of fix-price equilibrium, the favorable conditions for a devaluation and a revaluation are thus emphasised.